One localized payment company wants to become the main payment processor for Africa’s emerging economy.
Paystack, a Nigerian payment processing company founded in 2015, has 17,000 merchants under its belt, and accounts for 15 percent of all online payments in Nigeria. Emmanuel Quartey, the company’s head of growth, said flagship customers include Taxify, a ride-sharing app similar to Uber, and MTN, a large African telecommunications company. Though Paystack now operates exclusively in Nigeria, Quartey said plans are in the works to “quietly” test operations elsewhere. Options include Kenya, Ghana and South Africa.
The goal for Paystack, which now has 35 employees, thanks to a $10 million round of financing that closed in August, is to one day do business with all of Africa — a growing economy worth $3.5 trillion, according to IMF data.
Its customers are already able to accept payments from outside the country in different currencies. In an effort to diversify its income, Paystack is also testing offline payments in Nigeria, like one of its investors, Stripe.
Paystack has a worthy local competitor in Paypal, which has 600,000 accounts in Sub-Saharan Africa. But Thad Peterson, an analyst at Aite Group who covers mobile and emerging payment methods, said the cash-based economy presents a challenge for the eBay-owned company. Though Paypal has similar cash-based services they don’t make up a bulk of its payment processing business. Alternative payments have been slow to catch on in Africa because it was only a decade ago when many consumers gained access to bank accounts, breaking away from decades of a cash-based system.
Such access is a major boon to African retailers, who for the first time are able to sell goods and services to international customers via Paystack, opening up a global market share.
Unlike Paypal, which redirects online purchases through its website before returning the buyer to the business to complete the purchase, Paystack integrates natively. The consumer never sees it, only the checkout process Paystack enables and operates.
“We definitely find that’s a thing that merchants really enjoy — that customers are still within their branded experience and don’t need to go anywhere,” Quartey said.
“They’re positioned really well to broaden out across Africa,” Peterson said. “The beauty of their platform is it really is tender-agnostic. It doesn’t matter if it’s in Nigeria or Kenya or anywhere. Whatever currency, whatever market or payment type, they can manage.”
As the African economy continues to grow, with the World Bank forecasting a 3.6 percent growth rate by 2019, Paystack is “well positioned” to grow along with it, Peterson said.
“It’s really moving the payment space very, very quickly to a pretty sophisticated place, which is Paystack, and at the same time, it’s adding needed lubrication to the economy because suddenly money has velocity,” he said.